U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20092 / April 25, 2007
SEC v. Starcash, Inc., et al., Case No. 02-80456-CIV-MIDDLEBROOKS (S.D. Fla., filed May 16, 2002)
The Securities and Exchange Commission (Commission) announced that on April 12, 2007, a federal Grand Jury in the Southern District of Florida indicted Jeanne B. Leclercq and Frederick J. Shapiro on multiple counts of mail fraud, wire fraud, money laundering, and conspiracy to commit mail and wire fraud. Leclercq is the former president and chief executive officer, and Shapiro, the former chief financial officer, of Starcash, Inc. (Starcash), a now defunct company that was purportedly in the business of making payday advance loans. The indictments stem from Leclercq and Shapiro's role in a scheme in which they and Starcash fraudulently raised more than $8.3 million from investors nationwide. Leclercq and Shapiro were both arrested.
According to the indictment, Leclercq and Shapiro, through telephone calls, faxes, e-mails, and in promotional materials, solicited investors to provide money to Starcash. The indictment alleges that the materials explained to investors that their money would be used to allow Starcash to fund current payday advance loans and to purchase additional loans on behalf of investors. The indictment also alleges that investors were led to believe that their investments was secured by "accounts receivable" checks of the payday loans, and that investor dollars would come into a trust account and be accessed only for funding advances and earning fees. In fact, according to the indictment, the Starcash investments were not secured and only a very small percentage of investor funds were used to fund payday loans. Instead, the indictment charges that the majority of investor funds were used to pay substantial commissions to Starcash's sales agents; to make "dividend" payments to other investors; and to fund a luxurious lifestyle for Leclercq and Shapiro and their friends and family members. The indictment also charges that Starcash's promotional materials did not disclose that six states and one Canadian province had issued cease and desist order prohibiting Starcash from continuing to raise money in those jurisdictions.
On March 16, 2002, the Commission filed an emergency civil injunctive action in the United States District Court for the Southern District of Florida against Starcash, Leclercq, and Shapiro, among others, and obtained a temporary restraining order, an asset freeze and an appointment of a receiver against them. On September 23, 2002, the Commission obtained orders of permanent injunction against Leclercq and Shapiro, pursuant to their consents and without admitting or denying the Commission's allegations, based on their violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On October 29, 2003, the Commission obtained final judgments setting disgorgement and imposing civil penalties against Leclercq and Shapiro.
The indictments against Leclercq and Shapiro were derived from the same activity that led to Commission's filing of its emergency civil injunctive action against them.